Pay bonanza for Mothercare duo

THE auditor to Mothercare has helped devise a pay scheme set to yield chief executive Ben Gordon £2m for his first year's work.

The scheme, designed by Deloitte & Touche, is also on course to produce total remuneration of more than £1m for finance director Steven Glew just eight months after he joined.

The retailer's spectacular share price bounce has ensured Gordon and Glew will be two of the highest paid executives on the High Street, earning more than rivals in much bigger companies.

The pay scheme was created by the Executive Compensation Practice arm of Deloitte, which also audits Mothercare.

The accountancy watchdog, the Auditing Practices Board, today launched a crackdown on accounting firms that receive fees for non-audit work from their audit clients. The board recommends explicitly outlawing audit firms from advising on boardroom pay.

The Combined Code on Corporate Governance puts some restrictions on the use of auditors, but fails to address the issue of auditors that help set boardroom pay.

In its annual report Mothercare omits to explain how it ensures that auditor objectivity is safeguarded - an omission that has since been outlawed by the code.

Gordon, a former Disney stores boss, was appointed last December and has helped engineer a dramatic recovery. The childrenswear and motherswear retailer had been plagued with distribution and other problems. The shares have trebled in a year.

His share options are showing a £662,000 paper profit. He has already achieved enough of a share price lift to qualify him for a further £632,000 of free shares from a long-term incentive scheme.

Gordon is also showing a £93,000 profit on shares bought by him, but paid for by Mothercare, in January. He is paid a base £325,000 and is on target for a large bonus this year, which can be up to 100% of base pay.

Glew, who arrived in March, has made a paper profit of £870,000 on share options in eight months. His base pay is £200,000 and his bonus can be up to £170,000.

A spokeswoman for Mothercare said it was premature to quantify the duo's likely pay. 'But there is no doubt these financial rewards are justified,' she added. 'Just under a year ago Mothercare was haemorrhaging cash and trading was very weak. Ben Gordon and his team moved quickly to stabilise the business. Loyal shareholders have been rewarded with a 270% growth in share price since the low point in February.'

She confirmed that Deloitte had designed Gordon's incentive scheme.

Deloitte said: 'We do advise (on pay). We don't set policy. That's a matter for the board.' It declined to say how many other audit clients it advised on executive pay.

Mothercare paid Deloitte £200,000 for audit work and £139,000 for non-audit work last year.

The schemes were approved by the independent directors, led by businesswoman Angela Heylin, who chairs the homeless charity House of St Barnabas.